ADX Gold Technical Analysis & ADX Signals
Created and Developed by J. Welles Wilder
This a momentum indicator used to measure the strength of a market trend: it's derived from DMI - Directional Movement Index that has two lines.
+DI - Positive Direction Movement Index
–DI - Negative Direction Movement Index
ADX is calculated by subtracting these 2 values and applying a smoothing function.
The ADX is not a directional indicator but a measure of the momentum of the xauusd trend which has a scale of Zero to 100.
Higher the indicator reading the stronger the price trend.
A value of below 20 reflects that the xauusd/gold market isn't trending but heading in a range.
A value of above 20 confirms a buy or sell signal & reflects a new trend is emerging.
Values above 30 indicate a strong trending market.
When ADX trading indicator turns down from above 30, it demonstrates that the present xauusd trend is losing momentum.
ADX combined with DMI Indicator
Since ADX alone is a directionless indicator it's combined with the DMI index to determine the direction of the xauusd.
DMI
ADX & DMI Index
When the ADX is combined with DMI index one can determine the direction of the trend and then use the this indicator to determine the energy of the prevailing xauusd trend direction.
Technical Analysis and How to Generate Signals
Buy Trade Signal
A buy signal gets derived and generated when the +DI is above –DI, & the ADX indicator is above 20
The Exit signal gets derived & generated when the indicator turns down from above 30.
Buy XAU USD Signal
Sell XAU/USD Signal
A short signal gets derived and generated when the –DI is above +DI, & the ADX indicator is above 20
The Exit signal gets derived & generated when indicator turns down from above 30.
Sell Signal
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